Ding Yi Feng, the Hong Kong-listed investment group whose stock price rocketed by almost 6,000 per cent before it was frozen during a market manipulation probe last March, tumbled by more than 90 per cent on its first day back from suspension.
The collapse in its share price on Thursday, which wiped out almost HK$26bn ($3.3bn) in market capitalisation, came after Hong Kong’s Securities and Futures Commission said that it would allow the stock to resume trading but would also begin proceedings against company officers for suspected market manipulation in the group’s shares.
In March 2019 the SFC said it would investigate whether a false market had been created in the trading of Ding Yi Feng shares in both Hong Kong and in mainland China. As it did so it issued notices to nine local brokers, ordering them to stop dealing in the stock.
The Shenzhen-based company, chaired by a self-described “sinology master with profound knowledge and great and influential virtue”, first grabbed attention early last year as its stock became one of the world’s best performing.
Until its suspension by the SFC, Ding Yi Feng had the best three-year return of all of the 1,136 companies on the MSCI Emerging Markets index, up more than 5,760 per cent to a capitalisation of almost HK$29bn. Despite the surge in its stock price, the company had lost money in seven of the eight years to 2018.
The company was added to MSCI’s index in 2018, meaning investors tracking the benchmark had no choice but to buy it. BlackRock, for example, held 2.1 per cent of the stock, according to the latest listing of shareholders tracked by Bloomberg. Vanguard, another giant in passive investing, is also listed as a top-10 shareholder, alongside Japan’s Government Pension Investment Fund.
Ding Yi Feng could not be reached for comment on Thursday.
The company is a closed-end investment fund that listed in Hong Kong under another name in 2002. It was a penny stock for most of its existence until China-born Sui Guangyi bought a controlling stake in 2015.
According to the company’s website, Mr Sui was once the vice-mayor of a city in Jilin province in China’s north-east, and has a personal “mission” consistent with that of China’s Communist party. The company’s president, Ma Xiaoqiu, is described as “an elegant wise woman and an angel investor with sagacious vision”.
Ding Yi Feng is one of many small Hong Kong-listed stocks that have experienced inexplicable rises in recent years. In the wake of a number of scandals, the SFC has sought to crack down on apparent manipulation of small-cap stocks.
On Wednesday it said it would update the market further, once proceedings get under way.